U.S. GOVERNMENT PRINTING OFFICE

66–167 WASHINGTON : 2000

WOMEN IN BUSINESS

HEARING

BEFORE THE

SUBCOMMITTEE ON

GOVERNMENT PROGRAMS AND OVERSIGHT

OF THE

COMMITTEE ON SMALL BUSINESS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

WASHINGTON, DC

JUNE 8, 2000

Serial No. 106–62

Printed for the use of the Committee on Small Business

(

(II)

COMMITTEE ON SMALL BUSINESS

JAMES M. TALENT, Missouri, Chairman

LARRY COMBEST, Texas

JOEL HEFLEY, Colorado

DONALD A. MANZULLO, Illinois

ROSCOE G. BARTLETT, Maryland

FRANK A. LOBIONDO, New Jersey

SUE W. KELLY, New York

STEVEN J. CHABOT, Ohio

PHIL ENGLISH, Pennsylvania

DAVID M. MCINTOSH, Indiana

RICK HILL, Montana

JOSEPH R. PITTS, Pennsylvania

JOHN E. SWEENEY, New York

PATRICK J. TOOMEY, Pennsylvania

JIM DEMINT, South Carolina

EDWARD PEASE, Indiana

JOHN THUNE, South Dakota

MARY BONO, California

NYDIA M. VELA ́ZQUEZ, New York

JUANITA MILLENDER-MCDONALD,

California

DANNY K. DAVIS, Illinois

CAROLYN MCCARTHY, New York

BILL PASCRELL, New Jersey

RUBE ́N HINOJOSA, Texas

DONNA M. CHRISTIAN-CHRISTENSEN,

Virgin Islands

ROBERT A. BRADY, Pennsylvania

TOM UDALL, New Mexico

DENNIS MOORE, Kansas

STEPHANIE TUBBS JONES, Ohio

CHARLES A. GONZALEZ, Texas

DAVID D. PHELPS, Illinois

GRACE F. NAPOLITANO, California

BRIAN BAIRD, Washington

MARK UDALL, Colorado

SHELLEY BERKLEY, Nevada

HARRY KATRICHIS, Chief Counsel

MICHAEL DAY, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT PROGRAMS AND OVERSIGHT

ROSCOE G. BARTLETT, Maryland, Chairman

MARY BONO, California

PATRICK J. TOOMEY, Pennsylvania

RICK HILL, Montana

DANNY K. DAVIS, Illinois

RUBE ́N HINOJOSA, Texas

CHARLES A. GONZALEZ, Texas

NELSON CROWTHER, Counsel

(III)

C O N T E N T S

WITNESSES

Page

Hearing held on June 8, 2000 ................................................................................. 1

Henderson, Laura, President, Prospect Associates ........................................ 3

Parker, Suzane W., President & CEO, Ward Global Enterprises ................ 6

Keenan, Linda M., Director of Association Marketing, Lucent Technologies .......................................................................................................... 10

Neese, S. Terry, CEO & Founder, Terry Neese Personnel Services ............ 12

Wirth, Diane M., Representative, Women’s Business Institute ................... 15

Mayer, Glen, United Parcel Service ................................................................ 17

APPENDIX

Opening statements:

Bartlett, Hon. Roscoe G. .................................................................................. 32

Prepared statements:

Henderson, Laura ............................................................................................. 34

Parker, Suzane W. ............................................................................................ 40

Keenan, Linda M. ............................................................................................. 46

Neese, S. Terry ................................................................................................. 53

Wirth, Diane M. ................................................................................................ 57

Mayer, Glen ...................................................................................................... 63

(1)

FOCUS ON WOMEN’S BUSINESS ENTERPRISES

THURSDAY, JUNE 8, 2000

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON GOVERNMENT PROGRAMS

AND OVERSIGHT,

COMMITTEE ON SMALL BUSINESS,

Washington, DC.

The Subcommittee met, pursuant to call, at 10:40 a.m., in Room

2360, Rayburn House Office Building, Hon. Roscoe G. Bartlett

(chairman of the Subcommittee) presiding.

Chairman BARTLETT. Our subcommittee will be in order. Would

the witnesses please take their seats at the table.

Good morning and welcome to this hearing of the Subcommittee

on the Government Programs and Oversight of the Committee on

Small Business. A special welcome to those who have come some

distance to participate and to attend this meeting.

On October 8, 1997 and March 25 in 1999, the Subcommittee on

Government Programs and Oversight held hearings to showcase

women’s business enterprises on a national level and to examine

issues of concern to women entrepreneurs such as the availability

of capital. These were the first hearings in almost a decade devoted

to women in business.

Why this commitment to help women start new businesses or

grow existing enterprises? Because it is the right thing to do, and

because women entrepreneurs are a key dynamic in this Nation’s

present prosperity. The following statistics which are from the

Small Business Administration, speak for themselves: The number

of women-owned businesses increased 89 percent over the last decade to an estimated 8.5 million. Second, women-owned businesses

generated $3.1 trillion in revenue, an increase of 209 percent between 1987 and 1997. Third, more than 1.4 million women-owned

businesses with employees generated $2.8 trillion in revenue. The

number of women-owned businesses with employees grew 46 percent from 1987 to 1997. And fourth, revenue of women-owned businesses with employees grew 221 percent from 1987 to 1997.

This hearing is a continuing commitment to spotlight the vital

nature of women’s business enterprises to the economy of this Nation as a whole and to the communities in which we live. This

hearing provides, as did the previous ones, a forum for learning

how the private sector is succeeding or failing to meet the needs

of women in business and to focus attention on those deficiencies

that may exist.

The hearing also provides an opportunity for women business

owners to express their views as to the effectiveness of Federal

2

Government programs designed to help small business owners and

those who aspire to go into business for themselves. Congress

needs to know whether these programs are succeeding or failing.

Lastly, this hearing provides a vantage point for identifying problems that women business owners encounter as the result of overregulation and burdensome government paperwork. Is the Federal

Government a friend or a foe?

In recent years Congress has increasingly supported legislation

aimed at helping women start and grow businesses. The Committee on Small Business has supported the National Women’s

Business Council, Women’s Business Centers, and the Microloan

Program.

Proposed changes in the 7(a) loan program will help make loans

more readily available to women entrepreneurs. It is hoped in the

near future that the SBA will be totally out of the business of approving loan applications. This is the case, presently, with respect

to more than half of the dollar amount of loans presently being

made. The hometown banker will be the decision-maker, not some

bureaucrat in a remote location who does not know the lender.

[Mr. Bartlett’s statement may be found in appendix.]

Chairman BARTLETT. Again, good morning and welcome to this

hearing of the Subcommittee on Government Programs and Oversight of the Committee on Small Business. Thank you very much

for coming to the hearing. Let me now introduce our witnesses.

Ms. Laura Henderson, President and CEO, Prospect Associates.

She is a member of the National Women’s Business Council.

Ms. Suzane Ward Parker, President and CEO Ward Global Enterprises, board member, National Black Chamber of Commerce.

Ms. Linda Keenan, director of association marketing, Lucent

Technologies.

Ms. Terry Neese, President and CEO, Terry Neese Personnel

Services, Incorporated, cofounder, Grassroots Impact Incorporated.

Ms. Diane Wirth, President, The Solution Works, Incorporated,

board secretary, Women’s Business Institute.

Mr. Glen Mayer, corporate supplier, diversity coordinator, United

Parcel Service.

Thank you all very much for being here at the hearing, and we

will begin with the testimony. Oh, Danny Davis has joined us. Mr.

Davis, thank you very much for joining us and any comments you

would like to make before our witnesses testify?

Mr. DAVIS. Well, thank you very much, Mr. Chairman, and let

me thank you for calling this hearing. I think it is a very important

one and especially one that we need to pay a great deal of attention

to. Women entrepreneurs are an increasingly significant part of the

United States economy. Women, of course, own more than 8 million

businesses that account for approximately one third of all U.S.

businesses and are starting businesses at twice the rate of men.

Surrounding by these stirring statistics, it is the fact that women

still encounter numerous obstacles trying to start, maintain or expand the business; obstacles which must be eliminated if we are

ever to realize the full potential of this dynamic sector of our economy.

Consequently, the programs offered by the Small Business Administration and women centers provide the healthy social and ecoVerDate 11-MAY-2000 14:09 Oct 11, 2000 Jkt 067087 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 E:\HEARINGS\66167 pfrm02 PsN: 66167
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nomic environment necessary to cultivate a fledgling business. In

spite of all these programs and all of these efforts, and in spite of

the fact that we have come a long way towards the development

of creating a fair and equitable playing field, we realize that there

is still some distance to go, so a hearing like this one should indeed

help us along the way, and so I thank you, Mr. Chairman, and look

forward to the discussion.

Chairman BARTLETT. Thank you for your remarks. I frequently

tell audiences that women-owned small businesses are growing, as

you indicate in your remarks, at twice the rate of male-owned

small businesses. I remind the bankers they have a lower bankruptcy failure rate. I also note that they are better employers.

Women are different than men. Our military has trouble figuring

that out, but they are different. Women are more empathetic, they

are more compassionate, and I am not surprised that they are better employers. For those same reasons, they are better corporate

citizens.

In spite of all these things, women still have many impediments

in going into business, and we are focusing primarily on availability of capital and whether our government programs are helping to make capital more available to our women-owned small businesses.

So we will begin with the testimony of Ms. Laura Henderson.

STATEMENT OF LAURA HENDERSON, PRESIDENT AND CEO,

PROSPECT ASSOCIATES, AND MEMBER, NATIONAL WOMEN’S

BUSINESS COUNSEL

Ms. HENDERSON. Good morning Mr. Chairman, Mr. Davis. Thank

you for giving me the opportunity to testify today. I am testifying

today in my role as an appointee to the National Women’s Business

Council, which is a bipartisan Federal panel that provides advice

and counsel to the President and to Congress on matters of importance to women business owners.

The Council has played a vital role in leading policy discussions,

developing effective strategies which have been fundamental to the

expansion and recognition of women business owners as an integral

force in our economy. And I would like to submit, for the record,

the 1998 annual report of the National Women’s Business Council.

Chairman BARTLETT. Without objection, and let me say that all

of your written testimony will be made a part of the record, so feel

free to summarize it. It will all be a part of the permanent record.

Thank you.

Ms. HENDERSON. Thank you. The Council is being considered for

reauthorization this year, and I believe you will agree with me that

the work that the Council does is vital, and that we have done very

much to create a solid infrastructure that has benefited one of the

fastest growing segments of our economy.

Twelve years ago in 1988, I testified before the House Committee

on Small Business in a hearing to explore the barriers women business owners face and to identify actions that could be taken to enable women business owners to reach their potential and contributing to our economy. The subject of these hearings was the passage of legislation that took three very decisive actions that have

had a very major impact on businesses run by women. The legislaVerDate 11-MAY-2000 14:09 Oct 11, 2000 Jkt 067087 PO 00000 Frm 00007 Fmt 6633 Sfmt 6602 E:\HEARINGS\66167 pfrm02 PsN: 66167
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tion established the National Women’s Business Council, and established the Women’s Business Development Center programs.

Perhaps as important of any action taken in the history of women

business ownership was the decision to direct the U.S. Census Bureau to expand the collection of business data to include the largest

women-owned businesses, C corporation. The committee should

take great pride in the accomplishments of the Council and of the

other programs that resulted from this landmark legislation. The

legislation truly changed the landscape for women business owners.

When we came to the hearing in 1988, those of us who were

women business owners knew that the data that existed did not reflect the reality of women business owners. At that time, the data

said that women-owned businesses had revenues of less than

$10,000 and had no employees. Today, the data that we have documents the potent economic force of women business owners. The

Census Bureau data continues to serve as the basis for both public

and private sector research initiatives, and the data that we have

from The National Foundation for Women Business Owners tells

us that, in 1999, there were 9.1 million women-owned businesses

in the U.S., employing 27.5 million workers, and that means that

one out of every four employees worked for a business owned and

run by a woman, and these businesses are generating $3.6 trillion

in sales.

Even more impressive than the expansion is the change in employment and revenues of women-owned businesses. Between 1987

and 1999, employment in women-owned businesses is up 320 percent and revenues are up 436 percent. This means that not only

are there more women-owned businesses, but those businesses are

larger, more substantial.

Chairman BARTLETT. Excuse me, the bell simply means that we

are now going back into session. They went out of session, they recessed briefly after taking a picture of the 106th Congress, and so

they recessed the House briefly for reasons that I don’t understand.

But now they are back in session. Thanks.

Ms. HENDERSON. And these businesses are providing increasingly

more job creation and making a greater contribution to the economy.

One of the studies that was done in the last couple of years that

I found most interesting was to look at women-owned businesses

owned by women of color, and we know that one out of eight

women-owned businesses is owned by a woman of color, and in

fact, women of color are the fastest growing segment of the womenowned businesses.

The impact of this data cannot be overstated, not only in documenting the power of the women entrepreneurial movement, but in

the significance of the research in developing effective strategies for

removing barriers facing women-owned businesses. We see that

this data has had a phenomenal impact on banks, financial institution’s and policy-makers.

The National Women’s Business Council has contributed greatly

to the base of knowledge on women business owners through its

support of research, and one of the things I find best about the

Council is that the Council’s strategies and approaches have been

based on research findings. So they are not merely just ideas, but

5

they are the results of research that sets a solid foundation to the

actions the Council takes.

I would like to tell you of a few of the activities that the Council

is doing. The first is in the area of Federal procurement. Over its

life, the Council has focused on increasing women-owned businesses participation and Federal procurement. We have been concerned that this marketplace has been closed to women. We are

concerned that the Federal agencies have not received the full benefit from the capabilities and talents of businesses owned by

women; but we remain seriously concerned that in spite of many

efforts by many people, women-owned businesses still receive only

2 percent of Federal prime contracts, about the same percentage

that we have received over the past 5 years. If the 5 percent goals

set by Congress were reached, women would be receiving contracts

worth $10 billion, a $6 billion increase over what we are now receiving.

I would like to discuss specific activities that the Council is sponsoring or endorsing. I would like to submit for the record, a Best

Practices Guide on contracting with women, which emphasizes that

the most effective tool for increasing procurement with women is

the commitment at the top of agencies to do business with women.

We are also commissioning a study of the characteristics of womenowned firms who have been successful in winning more than $5

million in government contracts.

This study will identify the characteristics and the opportunities

which have enabled these women-owned firms to be successful in

this market, and these findings will serve as the basis for developing policy and programmatic recommendations to assist other

women entrepreneurs in gaining access to this market.

The Council also supports and urges the expansion of the DOD

Mentor Protege Program to include women-owned businesses. One

of the exciting activities that the Council has had in the procurement area is to assist in the development of a Web site,

www.WomenBiz.gov, that will provide a single point of entry to

Internet information on doing business with the Federal Government, and will simplify access to information and contracting opportunities.

Another area that the Council has been very involved in is that

of access to credit. We have been watching women business owners’

access to banking and have now moved actively into researching

the next financial frontier for women business owners, access to the

equity market. Women-led technology companies are the newest on

the scene, and their access to investment capital will make the difference between success and failure.

The Council has taken the lead in establishing initiatives to ensure access to the equity markets for women entrepreneurs. One of

the initiatives is to create a Best Practice Guide on women’s access

to credit. The Council and the Milken Institute will issue a report

this summer that identifies financial strategies that have been successful in increasing access to credit for women launching and

growing their businesses, and which deserve replication.

The Council is also hosting a series of very exciting venture capital forums around the country, showcasing women-led businesses

before, private corporate, and venture capital investors. This series

6

of forums is called Springboard2000. The first forum in Silicon Valley presented 26 companies that, as a result of their involvement

in the forum, have raised $140 million in capital. A very exciting

outcome. We are having these forums around the country, and I

would like to invite all of you to the next forum, which will be held

in Dulles, Virginia, at AOL’s headquarters on July 11th and 12th.

In addition, the Council has hosted, in 1996 and 1998, national

economic summits to examine the critical issues facing women

business owners and to develop a consensus agenda. Summit ’98

resulted in the development of a Master Plan of Action, those serving to foster the growth and development of women-led businesses

and the economy as a whole. One of the critical consensus issues

from that summit is the need for development of women business

owners as leaders and advisors on national, State, and local levels.

The Council has made it a priority to work with women leaders in

each of the 50 States to support their involvement in local decisionmaking.

Women entrepreneurs have much expertise to offer in policy development, and we are assisting them in assuming their seat at the

table. Further, we are focusing many of our programs on the local

and regional basis. For example, Springboard2000. We believe that

the success we have achieved focusing on a national agenda must

be moved to a more local strategy.

In conclusion, the Council has been extraordinarily effective in

fulfilling its role as advisor to Congress and the President. Even

more important, the Council has been active in defining what actions are imperative to ensure that our Nation will benefit from the

full potential of the fast-growing, dynamic, vibrant part of our economy. The Council has accomplished an enormous amount, and

women-owned businesses and our economy have benefited.

The Council has been a catalyst for making our dreams come

true. And I believe that the Council is fundamental in achieving

our goals for the future. As a member of the Council, I know that

none of these accomplishments would have been possible without

the support of this Committee. I thank you for your support over

the past 12 years and seek your support in the Council’s reauthorization. Through this reauthorization, you support the growth and

success of women who are starting, leading and growing over one

third of our Nation’s businesses. Thank you.

Chairman BARTLETT. Thank you very much.

[Ms. Henderson’s statement may be found in appendix.]

Chairman BARTLETT. And now the testimony of Suzane Ward

Parker.

STATEMENT OF SUZANE WARD PARKER, PRESIDENT AND

CEO, WARD GLOBAL ENTERPRISES, AND BOARD MEMBER,

NATIONAL BLACK CHAMBER OF COMMERCE

Ms. PARKER. Thank you. Chairman Bartlett, Ranking Minority

Member Davis, committee members, thank you for allowing me,

Suzane Ward Parker, President and CEO of Ward Global Enterprises, and a member of the board of directors of the National

Black Chamber of Commerce, the opportunity to present to the

committee on the issues of women business enterprises and the

availability of capital.

7

Let me first give you a little bit of background and explain that

Ward Global Enterprises is a global company with two retail stores

selling beauty supply products here in the United States in Washington D.C. And Peoria, Illinois. With the ultimate growth strategy

of eventually franchising the operation nationwide, thereby offering

opportunity to other African American entrepreneurs through the

creation of jobs, purchasing of goods and services and providing

community participation through scholarships and mentoring.

Since our entry into this business, we have been able to provide

scholarships for minority students in Illinois and have recently

started a scholarship fund for the Howard University Business

School.

Additionally, our global reach extends to West Africa to the country of Ghana, where we have established an import business as distributors of hair care products for Soft Sheen International, a division of Loreal. Finally, the company will be launching a Web site

within the next few weeks, CEOSISTER.COM, that is designed to

offer women of color entrepreneurs information, networking and

learning opportunities that will help enhance and promote their

businesses.

I welcome the opportunity to come before this distinguished

panel to discuss my experience as an African American woman and

entrepreneur, and to share with you the perspective of many other

women of color who have had similar experiences.

As you know, women have joined the entrepreneurial ranks at an

astonishing rate, and you have heard some of the statistics already.

And we are projected by 2005 to increase ownership by 77 percent

and to generate close to $4 trillion in revenue. This is in spite of

the fact that we have not had the same access and availability to

capital and contracts as majority males. Businesses that should be

up and running and mature are still at the starting gate because

of this critical issue.

I continually hear from minority women with fantastic ideas for

businesses that, at the same time, relate tales of woe regarding inability to secure capital. These businesses range from technology,

trucking, manufacturing, consulting services, wholesale trade, and

the list goes on and on. These are very talented individuals, many

who have held executive positions in our country’s finest corporations and business schools; these are well-trained, experienced and

technologically competent people but lacking one thing, capital.

Let me first address the issue of capital. Obviously access to capital is a key ingredient to the success of every business. However,

it is the case, the rare case, when a woman, and especially a minority woman, has been able to secure financing prior to opening a

business. I have yet to meet one businesswoman, minority or majority, who has been able to secure initial financing for a business

venture, therefore tremendous talent is wasted and delay experienced as a result of having to find nontraditional sources of funding, which can be expensive and risky.

The greater loss here, however, is the contribution and impact

that we know minority women entrepreneurs can make to a community and to the labor market through the creation of jobs and

improvement to economically challenged areas. In 1999, women

business ownership increased 103 percent. The economic impact of

8

those businesses resulted in an increase in employment of 320 percent, and a growth rate in sales of 436 percent. These are impressive figures, considering the rate of traditional funding for those

businesses is not consistent with the rate of growth. Clearly, the

disparity of funding and the impact of those decisions will have an

immediate effect and long-term impact to our economy.

Many women are discouraged from even considering loans due to

a number of factors; one is fear of rejection. The reception one gets

when approaching a bank is less than welcoming. The typical response from a bank officer is to hand you a stack of brochures and

send you on your way. There is no attempt to set up a consultation

with a bank official to help guide you through the process or answer questions. Unless you are persistent and a bit pushy, you will

not be able to get in front of a decision-maker.

The level of paperwork. Many women, after approaching a bank

and then being told the loan must be SBA secured, are turned off

by the ensuing lengthy process and the burdensome paperwork.

Let me also add that there are banks that use the SBA loan

guarantee as a way to discourage women from applying. Too often,

the banks, without a full picture, will very quickly require the SBA

guarantee before completely reviewing the applicant’s file. The

level of consideration and receptivity toward reviewing and writing

the loan of a minority woman generally must be tied to the SBA.

The banking industry appears to want no risk whatsoever as it relates to minority women. The end effect of those decisions is that

it does lengthen the process and provides greater documentation

burden on the business owner.

Divorced women have the additional burden of having to not only

account for themselves, but must also explain financial decisions

that a former spouse may have made both positive and negative

that now effect that financial standing.

As a global entrepreneur, finding finance options to start up or

enhance a foreign operation is next to impossible. With the exception of letters of credit, my experience of researching alternatives

for manufacturing operations overseas have led to continued frustration and dead ends. The appetite of U.S. banks to consider financing of a non-U.S. venture is not there.

One particularly frustrating experience I had occurred after attending a conference on business in Africa and listening to a bank

representative express the bank’s position and positive desire to accommodate those types of investments. Upon contacting the same

individual, I was told that the bank would not even consider loans

to that part of the world. He would not even, as a courtesy, look

at my business plan. When I inquired why he held negative opinions, I discovered that these opinions indicated his level of knowledge of the region was outdated and out of touch.

Unfortunately I found that attitude to be more the rule rather

than the exception. However, these individuals are the decisionmakers that make it difficult or impossible to obtain financing.

The other area that needs critical examination is in the area of

procurement and contracts. Measured in both the number and dollar value of Federal contracts, the participation of women business

owners falls woefully short. Again, although women comprise almost 40 percent of small businesses, of which 121⁄2 percent are miVerDate 11-MAY-2000 14:09 Oct 11, 2000 Jkt 067087 PO 00000 Frm 00012 Fmt 6633 Sfmt 6602 E:\HEARINGS\66167 pfrm02 PsN: 66167
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nority women, we only receive 1.7 percent of Federal prime contract dollars and 31⁄2 percent of subcontract dollars. Additionally,

in 1999, the SBIC only awarded one percent of the venture capital

program to women.

Now as we sit here before Congress, I am very encouraged that

this panel is asking the right questions regarding problems and

issues. However, I am continually amazed that the issue of contract

disparity continues to exist, especially given the approved governmental structure and funding designed to eradicate discrimination

in the assignment of contracts with the government. The problem

is even more acute with women of color. Ladies and gentlemen,

there are qualified women and minorities available with the goods

and the service, so I ask why can’t we receive our fair share. As

the United States is experiencing one of the greatest periods of

business expansion, does it make sense that a significant percentage of the business world is being left out or granted less than

their fair share of the total opportunity?

What is needed for minority women entrepreneurs to be successful is equal access and fairness to financial institutions and government programs that have unfortunately had a history of discrimination. The American dream should not be so far out of reach as

to be inaccessible, especially given the framework that is already

there. To address these inequities and begin to see real progress,

Congress needs to critically examine why the disparity in lending

exists and put the appropriate measures in place to remedy the situation.

Many of us would also welcome alternatives to traditional

sources that take into consideration that we do not have the luxury

of friends and family with financial resources to help us get started. Far too many of us without trust funds are forced to use our

credit cards and mortgage everything to the hilt. It is a statistical

fact that 60 percent of women-owned businesses utilize credit cards

and finance companies to get started, which indicates that perhaps

we are facing barriers in accessing traditional credit and clearly

paying more for that credit.

If the well-established banks are unwilling to lend to us, then we

need venture capital firms as well as minority-owned banks, and

institutions that will see our diversity and experience as an asset

and give fair consideration for the unique challenges we face. The

government could take the lead in this area by designating part of

SBIC funds for exclusive use of women- and minority-owned businesses.

Serious consideration also needs to be given toward reducing the

paperwork required as well as expediting the process. There should

be an option to electronically submit an SBA application and have

the capability to query the status on-line as well. Too much time

and resource is spent chasing the bank contact who will typically

blame the delay or lack of information on the SBA.

Finally, a proactive approach to access government contract information and bidding needs to be addressed. It is truly shameful

as we discuss disparate treatment that the government procurement and contracts process has such a deficient report card. The

level of contracts awarded to minority women and women in general must improve. As all women, and especially minority women,

10

continue to pursue their own businesses and help strengthen our

economy, create jobs and opportunity, it is incumbent upon our national leaders to help erase any and all barriers to not only their

success, but our country’s success.

Again, thank you for the opportunity to address this distinguished panel.

[Ms. Parker’s statement may be found in appendix.]

Chairman BARTLETT. Thank you very much for your testimony,

and now Ms. Linda Keenan.

STATEMENT OF LINDA KEENAN, DIRECTOR, ASSOCIATION

MARKETING, LUCENT TECHNOLOGIES

Ms. KEENAN. Good morning, Mr. Chairman, Mr. Davis, and other

members of the subcommittee, and thank you for the opportunity

to appear before you today on behalf of Lucent Technologies.

Women business owners have been and continue to be an important market segment for Lucent.

Lucent Technologies designs and delivers the systems software

silicon and services for next generation communications networks

for service providers and enterprises. And of course, we are backed

by the research and development of Bell Labs. Today I am going

to address two key areas that Lucent has provided support for

women business owners, procurement and marketing.

Lucent Technologies has proudly supported Minority and Women

Business Enterprises, and we refer to that as MWBE, programs for

over 32 years, first as AT&T, and then as Lucent when we were

formed, after separating from AT&T on October 1st, 1996. In addition to our procurement focus of our MWBE programs, Lucent has

formed strategic partnerships with associations representing business owners, some of these associations include the National Association of Women Business Owners, the National Foundation for

Women Business Owners, and the National Women’s Business

Owners Corporation, and recognizing the opportunities and power

of this high growth segment, Lucent has created programs to assist

women business owners to be more successful, more informed, and

more effective in growing their businesses.

Now Lucent recognizes that MWBE utilization is not only an extension of a social or legislative obligation, but rather a strategic

asset that offers real benefit to our bottom line of profitability. Last

year with women-owned businesses, we were able to serve our customers more effectively and realize a savings of over $47 million.

Lucent Technologies spent over $1 billion with minority and

women-owned businesses representing about 9.5 percent of our

total procurement. Of that $1 billion, $461 million was spent on

white female-owned businesses, and the other 634 million dollar

was spent on the remaining minority business enterprises.

By developing ongoing relationships with women business owners, Lucent has benefited from a supplier base that is experienced,

technologically savvy and strategically located, and we have a policy of ensuring that qualified women business owners have the

maximum opportunity to provide us with goods and services.

From a marketing perspective, Lucent has been a premier corporate partner of the National Association of Women Business

Owners since 1997. The relationship with NAWBO has been exVerDate 11-MAY-2000 14:09 Oct 11, 2000 Jkt 067087 PO 00000 Frm 00014 Fmt 6633 Sfmt 6602 E:\HEARINGS\66167 pfrm02 PsN: 66167
11

tremely beneficial for Lucent to gain visibility, increase brand

awareness and loyalty and become better positioned with women

business owners. Through some of our dynamic marketing programs, Lucent has provided tools to NAWBO to help grow its membership and educate its members. We have been very successful in

taking what started as a sponsorship and building it into more of

a partnership, a real win-win situation.

I would like to share a few of the marketing initiatives we have

implemented in conjunction and collaboration with NAWBO. As

you may know, NAWBO has very aggressive goals to grow its

membership. As part of our negotiated sponsorship agreement, we

developed and produced a recruitment video for NAWBO to use nationally at the local chapters. It was called, ‘‘NAWBO, It’s Happening.’’ It has been shown throughout the United States and has

been extremely successful in assisting the local chapters to increase

their memberships. The video demonstrates the power of NAWBO

through real-life success stories, interviews and examples of the diversity of the NAWBO membership, and I am pleased to let you

know, too, that ‘‘NAWBO, It’s Happening’’ did win two prestigious

industry awards for its quality, message, impact and the difference

it made in helping NAWBO, and the awards were the Aurora Platinum Best of Show Award as well as the Communicator Award.

As we all know in this room, public policy is an important focus

for NAWBO and last year we produced a multimedia program

called 20/20 Vision to help NAWBO members learn about the economic impact of women business owners and the importance of

their participation in public policy issues. The 20/20 Vision program was training that was developed to inform, educate and update NAWBO members on key public policy issues and to engage

more of the members, get them more involved, hear more voices up

on Capitol Hill, and get them to participate in transforming public

policy. The program consisted of a series of seven videos, which

really highlighted the key issues that NAWBO is focusing on with

its members, a public policy handbook, and then we also do provide

each of the members with a customized Congressional Directory, so

they know who they should be in touch with and how to get in

touch with them.

We also sponsor a ‘‘government watch’’ section on the NAWBO

Web site so that all the NAWBO members can be kept current of

everything happening up here on Capitol Hill. Now NAWBO is

celebrating their 25th anniversary. Next week is their conference,

and we are producing another video; again, a tool for NAWBO to

help grow its membership, and we also have another Web-based

marketing tool that we developed to help NAWBO and Lucent keep

an open line of communication so that we can continue to build on

our partnership and understand the needs of NAWBO who are representing the needs of women business owners.

In addition to specific sponsorship of associations, Lucent has

also been very supportive of providing opportunities for women

business owners just starting out. We recognize that there are a lot

of obstacles, and Lucent, in conjunction with Working Woman Magazine, sponsored a ‘‘Partners for the Future’’ grant to honor women

entrepreneur start-ups. Two grants were awarded to women entrepreneurs who demonstrated creativity, business knowledge and the

12

ability to meet unique market needs. And each of these honorees

received a $5,000 grant, a Lucent partner communications system,

and, of course, a membership in the National Association of Women

Business Owners.

The business owners we have supported have been very receptive

to our support. I am pleased and honored to let you know we did

receive the National Corporate Partner of the Year from NAWBO

and several local NAWBO chapters, and I think more important of

what I am saying today is really a quote that came from one of the

letters from NAWBO, and I will share that with you.

‘‘Each year we look at our corporate supporters and choose one

whose partnership stands out, a partner that has provided not only

financial support, but also advice, counsel and superlative service

to women business owners. Lucent more than meets these standards, and we are proud to present you with this award.’’

In conclusion, this has been a very successful working partnership from both a marketing and procurement area. We have been

able to support women business owners by increasing our procurement objectives year after year, and we will continue to do that,

and in addition, our marketing sponsorship and partnership has

enabled us to become more visible in providing the information and

tools to enable women business owners to be successful.

So I appreciate the time to be here today and I look forward to

our continued partnership.

Chairman BARTLETT. Thank you for your testimony, and I wish

the Federal Government was doing as well as Lucent is doing.

Thank you very much.

[Ms. Keenan’s statement may be found in appendix.]

Chairman BARTLETT. And we will next hear from Ms. Terry

Neese. Thank you for joining us again.

STATEMENT OF TERRY NEESE, PRESIDENT AND CEO, TERRY

NEESE PERSONNEL SERVICES, INC., AND COFOUNDER,

GRASSROOTS IMPACT, INC.

Ms. NEESE. Thank you. Good morning, Mr. Chairman and members of the committee. I have to, right on the heels of what Linda

Keenan said, I have to thank Lucent Technologies for all that they

have done for women business owners as a whole around this country and the partnership between Lucent and women business owners is one that should be the envy of many.

My name is Terry Neese. I am the CEO and founder of Terry

Neese Personnel Services in Oklahoma and co-founder of Grassroots Impact with offices in Oklahoma City and Washington D.C.

I am past president of the National Association of Women Business

Owners and their corporate and public policy advisor. Grassroots

Impact represents several small business associations on Capitol

Hill, including NAWBO and the National Business Association. I

offer this testimony today on behalf of my companies, Grassroots

Impact and Terry Neese Personnel Services.

First, just returning from the National Women’s Small Business

Summit chaired by Senator Bond held in Kansas City Missouri this

past Monday, I highly recommend that the committee obtain the

issue recommendations from that summit and focus on moving

those recommendations through the legislative process. To that

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end, I also recommend that the committee establish a task force of

small business owners to review the recommendations, establish

some priorities and work with the committee to ensure success.

That conference was chaired by Senator Bond, Senator Diane

Feinstein, Senator John Kerry, and it was a bipartisan summit focused on issues that affect women business owners.

Now the technology that was used at that conference to vote on

the issues that are important to small business was a wireless keypad. So we had instant feedback on the top priorities for women

business owners, but I understand all of it will be on their Web site

today or tomorrow. So we will have the issues very soon.

The bottom line from what I could view from the answers that

were coming over from the wireless keypads was access, access to

capital, access to procurement, access to education and training.

Let me first address procurement. For the past 3 years, I and numerous NAWBO colleagues have presented testimony on behalf of

the National Association of Women Business Owners, NAWBO, before this committee previously and many others regarding procurement. That testimony called on the Congress to hold the administration accountable for the 5 percent procurement goal enacted by

the 1994 Federal Acquisition Streamlining Act. In fiscal year 1999,

the departments and agencies of the Federal Government awarded

prime contracts totaling 2.4 percent of the total dollar value of all

prime contracts to women-owned businesses.

As you have heard this morning, the National Foundation for

Women Business Owners recent study shows 9.1 million women

business owners employing 27.5 million workers and generating

$3.6 trillion, and they are receiving 2.4 percent of government contracts. They make up 38 percent of all businesses in the United

States and they are getting 2.4 percent of all contracts. Is there

something wrong with this picture?

On Tuesday, May 23rd, the President issued an executive order

to strengthen the executive branch’s commitment to increased opportunities for women-owned small businesses. In addition, that

same day, Senate resolution 311 passed the Senate unanimously.

The resolution authored by Senator Bond and cosponsored by Senator Kerry, Senator Landrieu, Senators Bingaman, Lieberman and

Harkin, urged the President to adopt a policy in support of the 5

percent procurement goal for women-owned small businesses and

to encourage the heads of the Federal Departments and agencies

to undertake a concerted effort to meet the 5 percent goal before

the end of fiscal year 2000.

I encourage and challenge the House of Representatives to issue

a similar resolution showing your support of this issue. While I am

encouraged by this show of support for more business opportunities

for women business owners, the House of Representatives must

make sure the U.S. Small Business Administration acts immediately to implement the President’s executive order.

Congresswoman Sue Kelly’s resolution is bottled up in committee, and I urge you to either move on that resolution or author

another resolution, and then we will have the administration, the

Senate and the House standing shoulder to shoulder in support of

women business owners’ procurement opportunities.

14

Now on to death tax. One of the most pressing issues facing

women business owners today is the death tax. Many have suggested that the estate, gift and generation-skipping tax, the death

tax, does not affect enough Americans, but many families sell out

early and pay a 20 percent capital gains tax on the appreciation

instead of a 55 percent tax rate on the fair market value of all their

assets. This means that businesses are sold and jobs are lost in the

community because many sell out to larger companies that consolidate and are not subject to the estate tax.

As an example, in the city of Williamsport, Pennsylvania, seven

family businesses have been sold to large companies resulting in

the elimination of thousands of jobs in that town. As a result of the

estate tax, the livelihood of the family members who worked in

those businesses was eliminated. Bottom line, the death tax elimination is all about saving jobs for families and their communities.

The estate gift and generation-skipping tax must be eliminated.

And I urge this Congress to pass legislation aimed at early phaseout or total elimination now.

Finally, installment sales and cash versus accrual basis. The

cash versus accrual issue is a day-to-day pervasive issue for small

businesses, and certainly the membership of the National Association of Women Business Owners. The installment sales issue only

applies when the business is sold. I believe the only way to explain

both of these issues and really bring the message home on a personal basis is to focus on cash in and cash out for any individual.

For example, how would a Federal employee cope with this issue

if they were told that since their income for the year would be

$60,000, that they would have to pay their taxes up front on the

$60,000 before they receive their income? Does that sound pretty

ludicrous? That is what has happened with both of these issues.

It is inexcusable for Treasury to issue regulations similar to the

above example and circumvent the Regulatory Flexibility Act,

SBREFA, and frankly, the legislative process. The Treasury employees are not elected by the people of the United States. So why

are they acting and issuing regulations like they are in Congress?

Installment sales repeal for accrual basis taxpayers must be reversed. Forcing small businesses to pay lump sum capital gains

taxes on the sale of their businesses is wrong.

I strongly support the Herger-Sweeney bill, H.R. 3594, to repeal

last year’s modification. I also support the cash versus accrual legislation, H.R. 2273, and Senate bill 2246, to protect small business.

Mandatory implementation of the accrual basis accounting would

be devastating, taxwise, the first year and would necessitate the

hiring of a full-time accountant for every small business owner.

Thank you for allowing me the opportunity to voice problems and

concerns facing women-owned businesses, and your support is

greatly appreciated in resolving these issues.

Chairman BARTLETT. Thank you very much, and during the

question and answer period we will have an opportunity to explore

more of these problems. Thank you very much for your testimony.

[Ms. Neese’s statement may be found in appendix.]

Chairman BARTLETT. Now I am very pleased to welcome Diane

Wirth, who is a constituent and has testified before us before, and

I see her out in the District because she is a very active member

15

of the Women’s Business Institute, and contributes a lot of her

time in helping women entrepreneurs get started on that first rung

up the business ladder.

Diane, thank you very much for joining us again.

STATEMENT OF DIANE WIRTH, PRESIDENT, THE SOLUTION

WORKS, INC., AND BOARD SECRETARY, WOMEN’S BUSINESS

INSTITUTE

Ms. WIRTH. Thank you and good morning, Mr. Chairman, Mr.

Davis and members of the subcommittee, for allowing me to appear

before you today to testify on women’s business ownership issues.

As Congressman Bartlett said, I am Diane Wirth, president of The

Solution Works, which is a technology training company, and also

the board secretary for the Women’s Business Institute. My goal

during this hearing is to provide you some insight as far as the

issues surrounding women’s business ownership, and also to provide you solutions or suggest solutions as a purpose of that. There

are three areas that I am going to focus on this morning.

The first one is access to resources followed by education and

training, which someone else alluded to, and also how these items

then tie into access to capital.

The Women’s Business Institute is dedicated to empowering

women to start or expand their businesses, and that is through

education and training, networking and business counseling. Although the Women’s Business Institute has been in existence for

a 5-year period, it wasn’t until July 1, 1999 that we were awarded

a grant by the Small Business Administration Office of Women’s

Business Ownership in order to expand the businesses in the rural

areas. We also received additional funding through the Appalachian Regional Commission to continue this work, and the success of winning the SBA grant was due in part to the efforts and

support of Congressman Roscoe Bartlett.

As Women’s Business Institute’s Technology Representative, I

provide one-on-one business counseling as well as e-mail and telephone counseling to women entrepreneurs. It is from this experience that I share this testimony.

Access to resources. We receive many calls from women entrepreneurs from Annapolis to Cumberland. Many need assistance in

some of the basic factual items in starting a business from where

do I obtain license and permit as well as how to take an idea and

convert it to a business concept. At the same time, we are asked

to assist them in developing their business plans and reviewing

and understanding cash flow statements. However, many of the entrepreneurs that we work with and meet with do not know how to

use the Internet, and if they do, they are not familiar with or comfortable with searching for information.

The resources available today is a lot more than it was 13 years

ago when I started my technology business, and at that time, we

only had access to one book in the library on business planning. So

what I demonstrate to the entrepreneurs are different Web sites

where they can access resource information. This can include information from patent and trademark to where do I obtain business

license and permits, also to demographic information such as from

the Census Bureau. The on-line business resources can provide enVerDate 11-MAY-2000 14:09 Oct 11, 2000 Jkt 067087 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 E:\HEARINGS\66167 pfrm02 PsN: 66167
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trepreneurs with tons of market research, also directories and statistics as well as identify who their competition is.

Many of the owners are not familiar with auction sites, so they

are not accessing the on-line resources in order to obtain supplies

or equipment for their business if they have an established business.

There is also a lack of mentors as well as support for new and

expanding businesses, but there is a surplus of proteges. Although

many organizations offer mentor programs, by matching a mentor

with a protege, the training on expectations and the continual commitment is often lacking. Oftentimes, the length of time of a request of a protege for a mentor is far too long. So the potential solutions that we offer are several. The resources are out there. But

they are not reaching the consumer, and in this case, the entrepreneur.

Like any business, the government needs to make a concerted effort to do the following: market the sites where they provide that

information; make the information visibly available in public

places, such as the library system or State and county economic development offices; you can also include information in the government mailers. We receive information from the IRS as well as the

Department of Labor. Distribute information to civic and entrepreneurial organizations, whether it be the Chambers of Commerce or

the home-based business associations, and also create a pool of

readily available mentors with particular skills and specialties or

offer the mentor some incentive for full participation in assisting

a protege.

In the area of education and training, it is necessary to have

some access to basic affordable training for women. Many womenowned businesses fail because of lack of training and education.

They need the ability to have the opportunity to practice their creativity, confidence, as well as sales and marketing, and topics such

as human resource development, learn how to ask questions, how

to maximize networking opportunities, and how to determine their

fee structure also make a big difference to the success of their business.

Web site—the development maintenance and marketing of a Web

site to gain more business. Studies reveal that small businesses,

with 500 or fewer employees, indicate that 30 percent of them believe that the Internet is important to achieving their business

goals. However, these businesses also believe that the cost, the security and the difficulties in implementing and maintaining the

sites need to be addressed. Although small businesses represent 98

percent of all small businesses in the U.S., only 31 percent of them

with 100 or fewer employees have a Web presence. Many women

are not comfortable in working with numbers. This is absolutely

important when operating a business. They have difficulty calculating their start-up costs, their monthly expenses, their cash flow

statements and forecasting sales.

So what are the solutions? We can develop additional workshops

making them affordable and accessible to women; you can also provide more forums like the Women’s Business Institute’s Entrepreneurial Workshops where successful entrepreneurs can share their

women business ownership story and experiences with those interVerDate 11-MAY-2000 14:09 Oct 11, 2000 Jkt 067087 PO 00000 Frm 00020 Fmt 6633 Sfmt 6602 E:\HEARINGS\66167 pfrm02 PsN: 66167
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ested in starting a business, and also to provide small grants for

the purpose of establishing Web site presence for increased marketability of their Web sites, would greatly assist women entrepreneurs.

In the area of access to capital, a recent study reported by the

Small Business Administration Office of Advocacy found that after

controlling for differences in creditworthiness and other factors, the

Hispanic-owned businesses were not significantly more likely to be

denied credit and African American-owned businesses were about

as twice as likely to be denied credit. Interestingly, both of these

groups were more likely to withhold a loan application for fear of

denial.

There are also many myths about grants. There are special programs for women as well as minorities, and many women who contact the Women’s Business Institute feel that they should be privileged and be given a break, so they call us to obtain grants. They

are always surprised to find that the grants are very focused as far

as programs, that they require grant writers, and that the award

of the grants oftentimes takes a lot longer in a time frame than entrepreneurs are willing to wait; and also many of the businesses

being started are not nonprofit organizations.

So the solutions we offer are to dispel the myths about grants.

If there are truly grants out there and not just the marketing of

a book of where to obtain grants from, provide the sources, what

areas, what are the qualifications. At the same time, it would be

good to know when businesses should look at refinancing a business loan or a combination of solutions, to help them grow their

business, continue special programs geared toward women entrepreneurs and make them readily accessible and also understandable.

I hope these challenges described in this testimony can be addressed and that these solutions also be considered. Once again, if

any of these ideas are implemented, the government needs to think

of ways to increase the exposure of the solutions to its target audience, and in this case, the women entrepreneurs.

Thank you for the opportunity to appear before the subcommittee

today and I will be pleased to answer any questions that you have.

[Ms. Wirth’s statement may be found in appendix.]

Chairman BARTLETT. Thank you very much for your testimony,

and now Mr. Mayer.

STATEMENT OF GLEN MAYER, CORPORATE SUPPLIER,

DIVERSITY COORDINATION, UNITED PARCEL SERVICE

Mr. MAYER. Good morning. My name is Glen Mayer with United

Parcel Service, and I am the coordinator of the Supplier Diversity

Program and the testimony is actually inside the book that you

have there. It is inserted inside the booklet.

On behalf of the more than 340,000 men and women of UPS, I

thank you for inviting UPS to participate in these proceedings.

UPS has long been committed to promoting business opportunities

among women-owned enterprises. In fact, one of our longest standing vendor relationships is with woman-owned LPS industries, a

supplier of UPS packaging products. From 20 years ago, they did

$10,000 a year with us to last year, they did $25 million a year.

18

It is evident that women-owned businesses have made enormous

strides in recent years. However, the potential for continued

growth is great and can be attained through collaborative efforts

between individual entrepreneurs and corporate and government

partners. Through our association with such organizations as the

Women’s Business Enterprise National Council and the National

Association for Women Business Owners, UPS has expanded its

commitment to meet the growing needs of today’s businesswoman.

Our network of more than 100 women-owned suppliers continues

to grow.

This growth is fueled by more than 200 UPS supplier diversity

advocates around the country who participate in women and minority business councils on a national and local level. As our involvement with these groups continues to increase, so does the success

of our program. Taking an active role in programs developed by

such organizations as WBENC, NAWBO, the National Minority

Supplier Development Council, and the Native American Business

Association allows us to remain visible to potential business partners.

It also is an excellent vehicle for three critical components of a

successful program, or any government program, you need accessibility, you need communication and you need outreach.

The various trade shows conferences and events are a great way

for suppliers to become familiar with our program. This year we

will distribute nearly 10,000 applications at trade shows and conferences alone. And that application is going to be accompanied

with a conversation about UPS, our program and what opportunities there may be to do business with us.

That is 10,000 face-to-face contacts. Once again, it is extremely

important whether you are a private business or the government

to interact with your suppliers.

Ease of entry also is critical to a successful program. At UPS the

procedure for entry into the program is designed to be supplierfriendly and aims to address any questions at the beginning of the

process. Only certified companies are allowed in our program and

we do not self-certify. Once a supplier is in our network, we work

to align them with the units of our company that would most likely

be able to use the products and services they offer. We have also

added another layer of convenience to the process by making our

application available on-line at www.community.ups.com.

Mentoring and development initiatives are also key components

of a successful program. A commitment to helping suppliers grow

their business is essential. Once suppliers have proven themselves,

we work with them to become a better business and a stronger

partner. Development assistance at UPS includes everything from

mentoring to sponsoring our suppliers to attend top schools, such

as Kellogg and Tuck School.

On occasion, we have provided executives to assist business associations in the areas of technology, finance and record management.

We have also introduced firms to other corporations that may

need the services they provide. The UPS approach to supplier diversity will continue to focus on interaction and communication.

And we will continue to aim to establish long-term successful busiVerDate 11-MAY-2000 14:09 Oct 11, 2000 Jkt 067087 PO 00000 Frm 00022 Fmt 6633 Sfmt 6602 E:\HEARINGS\66167 pfrm02 PsN: 66167
19

ness partnerships. We know that the continued success of womenowned businesses is vital to the American economy, and doing business with women-owned firms makes good business sense. We look

forward to continuing our support of women business enterprises

nationwide and applaud them on their many successes.

Thank you for your time.

[Mr. Mayer’s statement may be found in appendix.]

Chairman BARTLETT. Thank you very much for your testimony.

Mr. Davis, let me turn to you for your first questions and comments. Thank you.

Mr. DAVIS. Well, thank you very much, Mr. Chairman, and let

me just indicate that I really appreciate all of the testimony, and

it seems to me that each one of the witnesses really have their fingers on what the problems are.

Ms. Henderson, you mentioned that commitment at the top of

agencies have proven to be, perhaps, the most effective way, or the

most discernible impact that we have seen in terms of businesses

actually contracting or working with smaller businesses or womenowned businesses. And at the same time, Ms. Ward, in your testimony, you talked about the difficulty of having some top agency or

top CEOs or people really understand the lay of the land relative

to doing business.

How do either one of you, or both, think that we can change

those attitudes and those practices? I mean, what do you think will

best work to change those attitudes and practices which are humanistic? And it is not really something that you can push a button and get a response or get an action. It is not like the Internet.

It is something a little different. What do you think we can do to

change those attitudes?

Ms. PARKER. I will respond first to that. I think one of the observations they have made is that you do tend to see an awful lot of

activity in terms of very high executive level individuals, both in

the public and the private sector that do network and have access

to women’s organizations and minority organizations as well. Unfortunately, a lot of that activity is what I would consider to be ceremonial.

And so what you have are very high profile activities where you

know at the end of the event everyone feels very good about having

had the discussion and having learned something. But what is really lacking is the follow-up. The one example that I gave you, which

was very striking to me because it was indicative of what I have

seen over and over again and that is, you have an official that is

part of a panel, part of an event that is representing an organization or a company or whatever, and for the benefit of that particular event, there is a lot of goodwill that is discussed and so on.

What tends to happen after that, a month, a couple of weeks,

whenever, the follow-up is not there and in my case, things that

I have seen are, people who, very aggressively at a conference, ask

me to please follow up, please call me, and they wouldn’t even take

my calls, and that happens a lot. It happens a lot.

So I think there are event opportunities that are occurring, but

I think what really needs to happen is for the follow-up to occur.

The follow-up not just from the standpoint of I talk with you and

you talk with me, but you hear very impressive statistics in this

20

room, and these are public figures that all of us have talked about.

I think we still need to keep hammering home the disparity, factual disparity of what is happening and put a human face on what

is happening.

It is very easy to hear these things, a lot of people don’t associate

them with; they are actually people’s lives that are being impacted

by these decisions or the lack of decisions, and you hear 40, almost

40 percent of the businesses are women-owned, and then you talk

about 2 percent of contracts, you talk about less than 3 percent

overall. Someone really needs to take a look at that and put a

human face on what that means, how many people don’t get jobs,

how that equates to the people that have to have public assistance

as a result.

Put a human face on it so that it does hit home, and also make

people accountable. I would ask the question of, if I spent almost

20 years in corporate America. If I had had those kinds of numbers

in the programs that I measured, managed and was measured

against, I wouldn’t have had 20 years in corporate America. I

would have had a very short career.

And so how do we make people accountable for those kinds of

things, I think it is follow-up, and it is constantly getting that message out that there is a down side to not doing the right thing, and

our economy is impacted by it. It is not just Suzane Parker doesn’t

get a contract or Laura Henderson doesn’t get a contract; it hurts

the growth of our economy as well. How do we connect all of those

so that people see what is really going on?

Ms. HENDERSON. We have struggled with this, and certainly I

have talked before Congress for over 20 years about this issue. I

know we struggle with finding a solution. I think one of the things

we have to do is educate the people at the top of organizations and

have them make contracting with women-owned businesses a priority. We need to hold them accountable: there need to be consequences if they don’t meet their goals: and we need to identify

very specific actions. I think one of the exciting things of the study

that the Council’s doing with the National Foundation for Women

Business Owners, looking at over 5,000 who actually have gotten

government contracts. What can we learn from these companies?

What was different with them from other firms? What specific actions can we take?

I think one of my greatest disappointments being on the National

Women’s Business Council is the fact that when I go to the Interagency Council on Women Business Owners, we do not have agency heads. We have people very low in the organization who come

to those meetings. And I think Congress should ask the agency

heads why, if this is a priority they do not attend. I think the people at the head of organizations, and I think people in Congress,

have a voice and an opportunity. They need to have vision about

how to make change happen, but we need very specific doable, tangible actions that people can implement.

Mr. DAVIS. And let me just say, because I think all of us have

had essentially the same kind of experiences, no matter what it is

that we testify to. What brought me to my question was just last

evening I had dinner with two CEOs of major enterprises. One private, one semipublic and another person who was trying to talk

21

about getting business, and he kept making reference, he says well,

you know, Mr. So and so, who is the CEO of so and so corporation,

told his people to let us in and they let me in and I am now doing

$25 million worth of business with them a year.

The guy on the public side, well, sir, he says now, and all I want

you to do is tell your people, and the guy says wait a minute, I

can’t do that. And so my question is, are there any policies, because

I think part of our problem is that we deal in contradictions all of

the time. I mean, are there any policies and practices that you can

think of from a governmental vantage point or position that is actually prohibiting or inhibiting the ability to move beyond this 2.4

percent that we are talking about as opposed to moving closer to

the 5 percent, which is not that great in the first place?

Chairman BARTLETT. If the gentleman would yield for a moment,

in a former life, I was competing for government grants and contracts, so I am very familiar with your problem. Let me ask a question and then make a brief point. Once a woman-owned business

has gotten a contract, is it much easier to get that second contract

and the third one?

Ms. HENDERSON. My company does about, I would say, between $15 and $17 million of government contracts in a year, and the answer is yes.

Chairman BARTLETT. So breaking in was the problem.

Ms. HENDERSON. I think breaking in is the problem, but it is not

merely breaking in. You break into one part of one agency.

Chairman BARTLETT. That is true; you have got to fight that battle.

Ms. HENDERSON. Exactly. I think another major issue we face is

the issue of bundling, especially in DOD, because we all know that

being a subcontractor brings you very little quite often, except a lot

of work on the front end and no return on your investment. So the

ability to get prime contracts is very important. I think the issue

of the old boys’ network, which is what maybe you were talking

about last night, is an issue that we face, not that we can’t get the

information on an RFP, but getting the context in which to write

our proposals, getting the information on the political environment,

the issues that are very specific to, you know, a certain procurement is something that comes from relationships, not from writing.

And so it is very difficult to get in. It is very difficult to move

from the civilian agencies to the Department of Defense. It is just

an enormous regulatory load. It is the most regulated business in

the world, I think. And it also requires an enormous ability to wait.

Many of the procurement opportunities that we have involve submitting a proposal and waiting up to 2 years for the award. How

can a firm hold the staff, how can a firm start work the day after

they award it? They award it, they have waited 2 years and they

say now you are supposed to start working and you are supposed

to have the resources in place. It is a very complicated process.

Chairman BARTLETT. May I make one point and return to Mr.

Davis. I think that the problem is not so much discrimination, but

just the nature of the beast. These contract people are very comfortable dealing with people that they have dealt with before, and

I understand that because if they let a contract to a new company

and there is not a good performance, then they get bad marks from

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their supervisors. So they are very likely to let contracts to people

they have let contracts to before, because they have a comfortable

relationship with them, they have a good track record with them.

I had that difficulty because I did not get my degree at one of

the universities, at the people who were passing judgment on the

grants and contracts that I was applying for, and these were all

medical research kinds of things, got their degrees at these institutions and so I had, like you, to break in. I did that. But it wasn’t

easy. Once I had that first contract and that first grant, and—but

you are right, you must jump these hurdles in every agency you

deal with. It is not that you have established a good track record

over here that it is going to help you with this other agency. You

have got to do it all over again.

I don’t know, Mr. Davis, what the answer to that problem is, but

it is not just a problem for women. It’s not just a problem of minority women or minority-owned businesses. It is a problem with everybody that is trying to break in because you are new, you are trying to break in. And there is hope that this will change. It is changing. I noticed that last year it was 1.8 percent. This year it is 2.4

percent. If you look at a percent increase that is not 5, but even

if you go from 1.8 to 2.4, that is a pretty decent increase for a year.

And so we are on our way. I don’t know how to solve this problem, and I think it is just a systematic problem of the institution,

not so much any act of discrimination. But whatever it is, we have

got to solve the problem and that is why we are here.

Mr. Davis.

Ms. HENDERSON. Could I respond to that? In the early days of

my company, I had to hire a male negotiator. So while I agree with

you, I think it is more complex. When I tried to negotiate, and I

am a tough negotiator, I was being accused of crying in negotiations, which I never did. I know when I cry. I have been accused

of being pushy, unreasonable for trying to negotiate very reasonable things. When I would send in a male with exactly the same

stands on issues, it was very different. So while I agree with you,

there is another factor that is playing there, and all of us women

who do government contracting know the importance of the facts.

In fact, in our meetings, we often sit around and say, ‘‘Is this a

meeting we can send women to or is it one we have got to send

men to?’’

Chairman BARTLETT. They are comfortable working with men.

Ms. HENDERSON. Exactly.

Chairman BARTLETT. What we need are more women on the

other side of the table, and I hope we are getting there, too, in the

government.

Ms. NEESE. Can I respond to a couple of things? Laura is absolutely correct. At Terry Neese Personnel Services in Oklahoma, we

have a little over $5 million contract with just one agency, and we

don’t even want to try to go out and break into other ones, because

by the time you get the bid, and spend the time putting all the paperwork and everything together, you get the award. You have got

to go work on it instantaneously. That means you probably have

to hire more people to go and fulfill the award, and then, I am in

the temporary business, I have to do payroll for all those workers

every Thursday. So that payroll may be $200,000, $300,000 ThursVerDate 11-MAY-2000 14:09 Oct 11, 2000 Jkt 067087 PO 00000 Frm 00026 Fmt 6633 Sfmt 6602 E:\HEARINGS\66167 pfrm02 PsN: 66167
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day morning, and then I don’t get paid on that contract for 90, 120

days or even longer. So the Prompt Pay Act, is there a Prompt Pay

Act?

Chairman BARTLETT. There is a penalty for not paying promptly.

If they are not doing it, let us know.

Ms. NEESE. And the other thing I would like to speak to is, I

think it is all about leadership, and the President’s executive order,

I think, is a good executive order, and if you haven’t read it, I encourage you to read it, and I think that you should move forward

and make sure that it is implemented. When the president or the

CEO of Lucent Technologies or UPS or the President of the United

States of America says look, I am calling all my people in, we are

going to reach this goal, or we are not going to have jobs, period.

In my opinion, it is all about leadership.

Mr. DAVIS. I agree, but I think, I guess it is a little different, and

I was trying to compare the President of the United States with

the president of UPS or Lucent, and I think there are a few more

restrictions like 435 of them here, and another hundred over on the

other side, and yet I understand and I agree that leadership is vitally important.

The other question, Mr. Chairman, and I really appreciate your

approach to this, because you, too, I don’t think that you were a

back-slapping, glad-handing kind of guy who got any contracts on

the basis of that, and I think one of the reasons they appreciate

this committee is because there is an effort to really thoroughly

look at situations and try and determine whether or not something

can happen beyond the quid pro quo. And this kind of business

that we have all lived with so much and that has been such an integral part of life, and so I really appreciate your approach to it.

Recently we marked up in our committee a whole group of small

business initiatives, the President’s New Markets, one bill that I

am a primary sponsor of, the Business Links Program, and Ms.

Wirth, I wanted to kind of ask you if you think this approach, what

it does is exactly what you are talking about, it just gives the Small

Business Administration some money to do it, to establish business-to-business relationships, smaller businesses with larger businesses, and the Mentorship Protege. How effective do you think

that really is?

Ms. WIRTH. I think it probably needs a little bit more time, and

once again, the exposure to the entrepreneurs that it is there and

how it works. I think that for small businesses, to be able to access

that particular program and also, what Susan spoke about as far

as follow-up, is important. Many of us have spent our days participating in different functions with procurement, Department of

Treasury has a large one every year. They are excited when they

meet us, you know, one-on-one, and then we call them as follow up

and there is no return call.

I think business links could work, but once again, its exposure

to the entrepreneurs to let them know it is out there and what the

benefits are.

I would also like to say that as a prior 8(a) certified company

under SBA, we are one of the 55 percent of 8(a) companies that

never received a government contract at all, and the Baltimore Sun

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had cited that a couple of years ago, and I think that is really sad

that the program is in existence, and it doesn’t work.

Mr. DAVIS. And finally, because my question is actually—go

ahead.

Mr. MAYER. I was just going to add that this is kind of a rehash

of what I just went through with Georgia. The State of Georgia had

the same problem and they had asked if UPS would sit, the governor asked us to help them run a supplier diversity program, in

essence, in their government, and going through all the things that

you just mentioned, you know, what are the problems at the top

and everything, they talked through the whole process there, and

it all came down to administration, setting the tone, holding them

accountable, just all the things that have just been mentioned right

here. But the end result of private industry or public you know our

company’s out there working with government; it really rests at the

top, and then putting in the accountability guidelines.

Just like at UPS, I have guidelines and goals that I have to

reach. Some are set by the government because you have some contracts with us. Now if we don’t reach those, then we near trouble.

Well, this is the kind of the reverse that you need those accountability guidelines put in there, and I am anxious to see how this

works out, because the Georgia governor intends, Governor Barnes

intends on taking it to the other States and working with the same

type of problems that you have here.

Mr. DAVIS. The last point is just I followed Lucent and UPS for

a long time, especially Lucent, I used to live right across the road

from the big Western Electric plant. Plus, I studied Lucent when

I was studying psychology in terms of the Hawthorne studies, and

all those things that increased productivity and satisfaction, and so

I am not surprised. I mean, because Lucent does have a history of

being a progressive company or corporation, and, of course, UPS,

the involvement with the welfare to work, and Rodney Carroll on

loan to help run that for the President. Plus, we have got an excellent program that we work with UPS out of Chicago, and so I appreciate both your companies in terms of what you have done in

your own limited way to increase the diversification, but we have

got a long way to go in terms of the Federal Government.

Chairman BARTLETT. Thank you very much. We have a few minutes before another single vote. This time it will be a much quicker

vote because they are not taking a picture afterwards, and there

are a number of things that I would like to get on the record, so

we ask that you would stay for a very brief recess, then I will be

back as soon as I can. That was just a 15-minute bell. It takes us

about five minutes to get from here to there, so we have probably

got another 7 or 8 minutes for questions.

Ms. Henderson, you mentioned that one out of eight of the

women-owned businesses were women of color. Did I remember

that statistic correctly?

Ms. HENDERSON. That is correct, yes.

Chairman BARTLETT. That is about their percentage in our population is it not?

Ms. HENDERSON. I don’t know.

Chairman BARTLETT. I think what we are about, what, 12 to 14

percent, so that is roughly the percentage in the population. Has

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that percentage come up dramatically recently? Are we doing better?

Ms. HENDERSON. Actually, we see women of color starting companies faster than any of the segment of the women-owned businesses sector.

Chairman BARTLETT. So a couple of years ago it wouldn’t have

been one out of eight.

Ms. HENDERSON. Exactly. We are just beginning to study that.

In fact, the National Foundation for Women Business Institute did

the first study on entrepreneurship among women of color, but it

is something that we are looking at very carefully. I could get for

you, if you would like to see it, a copy of the study the Foundation

did, because not only did it look at women of color as a whole, but

it broke down women of color by different minority groups, which

you might find interesting.

Chairman BARTLETT. I notice Lucent did that. I was looking with

interest at your breakdown. You have done a very good job. There

were more of your contracts that went to women of color than to

white women, correct?

Ms. KEENAN. Yes, that is correct.

Chairman BARTLETT. I was impressed with that. When I first

saw Lucent, it was at this small business hearing, how did Lucent

get here? Then I read your testimony and understood why you

were here.

Ms. Parker, you mentioned several problems that you personally

had, and that you think that others have. One is the fear of rejection, it is just not nice to be turned down. I don’t know how to get

around that. I guess you just need to tell people that the answer

is not always yes?

Ms. PARKER. Well, I think the whole idea of a rejection, no one

likes to go through that, but one of the issues that you have is,

when you have, as we were just talking a second ago about, the

number of women of color that are entering the entrepreneurial

ranks, I mean, there are discussions that are going on all the time

about, where did you get your funding? What was the reception of

the banks? And it is pretty well understood that you are going to

get a cool reception, and we are not talking about, for the most

part, individuals that you know are setting the bar low.

We are talking about many of the people that I speak to that are

entering the entrepreneurial ranks right out of corporate America.

They have had very high executive level positions. They are very

skilled individuals, but the experience is the same across the board,

regardless of industry, regardless of interest or regardless of level,

that they are coming into the business world. And so you are just

not given consideration, you are not given a warm welcome whatsoever. You really do have to dig and scratch and be very tenacious

to move forward.

Chairman BARTLETT. You know, in a former life, one of my jobs

was, for 2 years, teaching medicine at Howard Medical School here

in the city, and near the end of those 2 years, it finally dawned on

me that I was no longer seeing people as black or white or Oriental, because we had a number of Orientals there. I was seeing

them as bright or dull, friendly or unfriendly. I thought, isn’t that

where we need to get to?

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I hope that one day we can stop talking about persons of color,

that we are all Americans, but I know we are not there yet, and

to make sure we are not discriminating, we need to keep records.

But I think the real goal is that we need, as Martin Luther King

said, to be judged by the content of our character and not the color

of our skin, and I don’t know how we get there.

I think we are making some progress, but there is still impediments, and we want to focus on those to make sure that they are

removed as quickly as possible.

Ms. PARKER. Could I make a very quick comment about that?

Chairman BARTLETT. Yes, ma’am.

Ms. PARKER. The issue of the social righteousness of treating people fairly, I am not sure, unfortunately that we will ever get there.

The impetus probably should be on enforcement, on accountability,

because I think to assume or to wish that people are going to view

everyone on an equal level, I mean, we have been struggling with

this for many, many years, and I am not sure we are ever going

to get there.

Chairman BARTLETT. I hope we get there, and on the way there,

I know we have to do the kind of things we are doing today, but

I genuinely hope we get there. There are a number of us already

there, it is not everybody, but we need to keep working, and we

need to keep records as we work to make sure that we are, in fact,

getting there.

I was impressed with the record of Lucent. You all are doing a

great job. 9.5 percent of your contracts are with women-owned

businesses?

Ms. KEENAN. No. Actually, let me clarify that. That is our minority and women-owned businesses. So it is a combination. I think a

point of clarification for your past comment——

Chairman BARTLETT. How many of those are women?

Ms. KEENAN. The women numbers, the only ones that we have

broken out is the white women, and that is the 461 million, and

it is about 5 percent. Now within the remainder, because the remaining is minority business enterprises which are men and

women, we don’t split that out.

Chairman BARTLETT. But for women alone, it is 5 percent, which

is where the government would like to get, and they are about 40

percent of the way there, a bit less than halfway there.

Ms. KEENAN. Right. And the other statistic that I did not include

in the testimony is that our procurement to women-owned businesses has increased since 1997, by 25 percent. So when you were

talking about where your trending is, ours has increased by 25 percent since that time, and we are at 5 percent now, and then we will

be continuing to have stretch objectives going forward.

Chairman BARTLETT. I was impressed both with what UPS is

doing and what Lucent is doing, and once again, I noted that almost everything that can be done in the private sector and the public sector is done better in the private sector. Both of you are doing

a better job than the Federal Government is and we are trying. It

is just that big bureaucracies have a problem. And so I am really

pleased that the private sector is leading the way here, and hopefully government will catch up. If you will give us a few minutes,

we will recess the committee and be back as quickly as we can.

27

Mr. DAVIS. Mr. Chairman, let me just say if I don’t get back, it

will only be because I have to be on the floor for the appropriations

activities that are going on there, but if I don’t, that is the only reason, because I am really enjoying this discussion. I think it is very

meaningful and Ms. Henderson, you did mention one of our big

problems and that is contract bundling. Something that——

Chairman BARTLETT. I will come back to that.

Mr. DAVIS [continuing]. We have got to get real serious about

doing something about.

Chairman BARTLETT. We have legislation.

[Vote break.]

Chairman BARTLETT. I call our committee back into session. Just

before the vote, we were talking about the bundling and the small

business problems with bundling. This is an unintended consequence of downsizing some parts of government, particularly Department of Defense where we have had most of the problems. And

since they had fewer people in procurement, they sought to have

fewer procurements, and the way to do that was just to have one

large contract rather than a lot of small ones. The first time we

were introduced to that was with moving, and many moving companies are mom and pop shops, they may be affiliated with large

moving companies, but the Department of Defense was going to

contract with a single company to provide all of the moving for Department of Defense personnel country-wide. This obviously was

going to eliminate most of the small companies.

What had been done previously was they would have a competition and the low bidder would get it. So obviously no mover can

move everybody in the military, but the winner got as much of the

business as they could handle, and anybody else got the business

at the same price of the winning bidder. So the government had

the benefit of getting the lowest possible price, and also the benefit

of having anybody come in, so lots of small businesses could participate in this program.

We recently had a problem with the Navy and Marine Corps.

They wanted to let a single contract for all of their communications

and telephones that would have cut out lots and lots of small companies. We finally got an agreement with them that 10 percent of

the price contract dollars would go directly to small business. Ordinarily, small businesses are looking to work for a prime, and we

have legislation that looks at getting the money to subcontractors

first by direct payment to subcontractors.

So you don’t have to wait for the 90 days that the prime waits

for his money, and then the prime lets you wait another 90 days

for your money. And meanwhile, you are trying to meet a payroll

every week, so we have legislation which will permit, require actually, direct payments to certain categories of subcontractors, so

they don’t have to wait for their payments.

And a question was raised about whether or not there was a

prompt payment law. Yes there is, and the government agencies,

if they don’t pay on time, they are supposed to pay a penalty. They

have to pay at least interest like IRS, they ought to pay penalty

and interest, shouldn’t they? They do that to you if you are late,

even if it is inadvertently late.

Terry, you mentioned the death tax. We vote on that tomorrow.

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Ms. NEESE. Good.

Chairman BARTLETT. It is not what I would like, which is to

eliminate the whole thing now, but at least we are starting down

the road where it will be eliminated. The problem with this is to

construct a bill that is not perceived as a tax break for the rich because that is going to be vetoed, and the truth is that the really

rich don’t need it, but there are a whole lot of people who aren’t

rich who really need it, and somehow we need to craft legislation

to get us over that hurdle, and I hope we are doing that. We will

see whether we get there or not with this legislation.

You also mentioned the cash versus the accrual basis for accounting. We had an IRS person at another hearing, and if your

gross receipts are between 1 million and 5 million a year, the government has the option of either accepting whatever method you

choose, or requiring you to use a different method. If you are over

5 million, you have got to use the accrual method, as I understand

it. If you are less than a million, you can use whatever you want,

and of course, most people use the cash method.

In questioning, it became obvious that at the end of the day, the

amount of tax collected would not be one cent different, whether

you paid your taxes on a cash method or an accrual method, and

our question to the IRS was why are you then harassing our small

businesses? If at the end of the day, you know, when they finally—

and I had the company for 10, 12 years, and when I retired, and

I liquidated the company, and the taxes that I paid would have

been exactly the same no matter what I had done it on an accrual

basis or cash basis, and he agreed that was true.

Why then is the government harassing our small businesses? We

really need legislation, and there is legislation there, I don’t know

whether it will make it through committee and on the floor this

year, but there really is a need to have legislation that prohibits

the IRS from harassing our small businesses. If the taxpayer would

get additional revenues by that, then you might see some justification for that, but not a dime different in the amount of money that

is ultimately collected; why are they doing it? This is very difficult

to understand why they are doing that. So we hope that we can

solve that problem.

The installment sales problem, another big unintended consequence, our fault we passed legislation. It just wasn’t clear, and

it permits the practice if you sell something, and most people can’t

pay for it all at once, that the tax collector says that you owe it,

just as you owe the tax, just as if you got the money all at once,

and so I hope that that will be corrected by appropriate legislation.

I would have thought that IRS would have had the discretion to

have interpreted the legislation another way, because none of our

people saw this as an unintended consequence of the legislation,

but the IRS certainly did.

You mentioned paperwork. We are trying to add IRS to the

SBREFA panel process. You know, the only two agencies involved

in the SBREFA panel process are the EPA and OSHA, and the testimony the other day indicated to us that the average small business owner spends more of his time complying with regulations

from IRS than either OSHA or EPA, and so we ought to be includVerDate 11-MAY-2000 14:09 Oct 11, 2000 Jkt 067087 PO 00000 Frm 00032 Fmt 6633 Sfmt 6602 E:\HEARINGS\66167 pfrm02 PsN: 66167
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ing the agency that is the biggest burden on our small businesses

in the SBREFA panel process.

What this process does is to require that in the promulgation of

new regulations, that they consider the effect on small businesses.

They have to do that and they have to have a hearing process.

They have to have a comments process. They have to answer to the

Congress, and we have a watchdog out there, the Office of Advocacy, and if you are not acquainted with Jerry Glover, who heads

that office, he is a genuinely good guy. When he says ‘‘us,’’ he is

talking about small business. When he says ‘‘them,’’ he is talking

about the government. He is about the only government guy I

know that when he comes and says I am from the government, and

I am here to help you, you don’t start laughing.

So we are trying to solve these problems.

Is there specific legislation—you mentioned a resolution encouraging our government agencies to become aggressive in achieving

the 5 percent goal. We will see where that resolution is and what

can be done to get that out, because I can’t imagine anybody opposed to that resolution. It is not binding. It is just a sense of the

Congress that this is a good idea, and it has been a goal for a long

while. Why don’t you get with it. The Senate has already done it,

I understand.

Ms. NEESE. Senate has already done it. It passed unanimously,

and the resolution here authored by Congresswoman Sue Kelly has

been languishing in committee now for about a year and a half,

which is pretty unbelievable. Like you said, I would think that that

piece of legislation would pass pretty quickly. I don’t know why

anybody would be opposed to it. So if they are going to bury it and

not pass it on, then let us get another one authored and get it

through committee and get it out to the floor so we can vote on it.

Chairman BARTLETT. After a year and a half, it is probably more

than languishing, it is probably dead.

Ms. NEESE. That is what I figured.

Chairman BARTLETT. We will see what can be done to resurrect

it.

Ms. NEESE. Good. Thank you very much.

Chairman BARTLETT. What is a certified company, Mr. Mayer?

You don’t self-certify. What is a certified company?

Mr. MAYER. Certified is what the NMSDC, National Minority

Supply Development Council, WBENC and NWBLC, they actually

go and do a site certification. They actually go to the business to

make sure it is not a storefront. We don’t go to all the businesses

that would come in. So instead, we only take certified companies

because we do not want to deal with storefront companies, passthrough companies, which are just saying they are maybe womenowned or minority-owned and they really aren’t a full-fledged company.

Chairman BARTLETT. You have 1,800 women-owned suppliers?

Mr. MAYER. Yes.

Chairman BARTLETT. Out of how many?

Mr. MAYER. Out of about 40,000, but of the 40,000, 25,000 are

small businesses. I don’t know in that how many are minority

small businesses. I just know that we have 1,800 non-small business women-owned businesses.

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Chairman BARTLETT. You don’t know how many women-owned

businesses are in the small business category?

Mr. MAYER. Out of the 10,000, there is quite a few in there.

Chairman BARTLETT. Okay. You mentioned that UPS has a practice of, on occasion, sending consultants, some of your people, to

work with the small business to help them solve some of their

problems.

Mr. MAYER. Right, right. We mentor with small businesses. For

example, there is a package company in Atlanta that we had a purchasing executive actually work with them over 4 years and took

them from—he was a second tier company. Because he was very

small, he won a $2 million contract as first tier in about 4 years,

but grew his business working with him.

Chairman BARTLETT. I just wanted to put on the record an example that is really not small business. I guess it was a small business before they started, but now it is not a small business. Garden

State Tanning, which is a company in Williamsport in our district

that makes leather for upscale Toyota cars, and they were having

great difficulty in meeting their deadlines, and they were having

to air freight the product to Japan. Whatever profit they might

have made went to the company that was air freighting the product. And so Toyota sent several of their people over to help them

reorganize their plant at no cost.

The result of that was now that for at least the last 2 years, they

have gotten two awards from Toyota. They have decreased costs

and increased quality. Ordinarily, you can do one of those at the

expense of the other, but they have both decreased cost and increased quality.

So I was really impressed with how effective a bigger company

could be in helping a smaller one when they saw what the problems were. They came over here clear from Japan, spent time in

the factory and helped them reorganize. It wasn’t any new equipment, by the way, it was just reorganization, just how to better organize, to do the work, and it didn’t cost Garden State anything

more than to be a very efficient company than it was costing them

to be an inefficient company. It was just how to do it better, so I

want to commend you on recognizing the value of working with

these small businesses.

Do any of you have any final comments you would like to have

on the record? Yes.

Ms. HENDERSON. A couple things. Related to the Prompt Pay Act,

and this would be enormous to all small businesses, but especially

women-owned businesses, the Prompt Pay Act does not cover cost

reimbursement contracts. It only covers time and material and

fixed price contracts. If the Prompt Pay Act could be extended to

cost reimbursement contracts, it would make an enormous, enormous difference.

The other thing in relation to Mr. Davis’ comments about Mentoring Proteges, the National Women’s Business Council did a survey across the country of business owners and learned that women

business owners take advantage of Mentor Protege programs to a

much greater extent than men do. So your focus on creating those

kinds of programs also would be of great benefit to women.

31

Chairman BARTLETT. Thank you. Other comments for the record

before we adjourn the meeting?

Ms. NEESE. I just want to be sure and urge you to look at the

recommendations that come out of this National Small Business

Women’s Summit in Kansas City this last Monday, and I think

there will be some great ideas focused around procurement. We

had a very, very heated discussion with the DOD who was present,

and on the premises for the meeting and there were a couple hundred women who spoke very passionately about procurement. So I

feel there will be some excellent recommendations coming out of

that summit.

Chairman BARTLETT. Were the procurement people from DOD

men or women?

Ms. NEESE. Men.

Chairman BARTLETT. We need some women procurement people

in DOD, don’t we?

Ms. NEESE. Both men were taken to task for their lack of outreach, whether true or not.

Chairman BARTLETT. Well, if there are no other comments, thank

you all very much for your testimony. The meeting is adjourned.

[Whereupon, at 12:45 p.m., the subcommittee was adjourned.]

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